Getting the Most from a Credit Card.
Is it possible for ordinary folks to ever come out ahead when choosing and using a credit card?
Probably not, but when it comes to our credit cards, my wife and I are basically in it for the miles. If you live on an island 2500 miles from the U.S. mainland, airline miles are a big deal. Our primary card gives us American Airlines miles; our back-up card gives us Hawaiian Airlines miles.
To accumulate as many miles as possible, we charge everything: groceries, gas, restaurant meals, our monthly DirecTV bill, Netflix movies, lumber for replacing rails on our pasture fence, vet bills for the two horses (ka-ching, ka-ching) . . . everything. If they’ll take credit cards, we charge it.
It pays off, too. I use miles for at least one round-trip to the mainland every year and, depending on where I’m going and the time of year, that’s worth anywhere from $700 to $1200.
Then, a few years ago, I took the time to read all the terms and conditions for our primary card and it was an eye-opener. It turns out that the premier cards—typically, cards that have an annual fee of $100 or more—offer some of the same protections you get with a travel insurance policy. And there are other benefits, too.
Take the pricey Mississippi River cruise my wife and I took several months ago. If we had had to cancel at the last minute for whatever reason, our credit card would have reimbursed me for the cost of the the non-refundable cruise tickets as long as I had paid for the cruise with their credit card. (I did, of course, because I want all those miles!)
And I don’t need to buy the expensive collision insurance the rental car companies offer. As long as I charge the Avis car to my credit card, the card will pay for the damage if I have an accident.
Finally, my monthly itemized statements provide important records for deductible travel and medical expenses. plus all of our charitable donations.
There’s just one cast-in-concrete rule which, if broken, causes the entire scheme to collapse: the entire credit card balance absolutely must be paid off in full every month. Every dime, without fail. If you don’t, you’ll be hammered with outrageous penalties and interest charges that will quickly take you from staying ahead of the game to quickly falling way behind. Anyway, this is what’s been working for us.
For all those who want to visit Europe, credit cards are getting more widely used and accepted, but there still are big disparities between countries. Where it’s totally normal to pay for your coffee with a card in the Netherlands, Scandinavia or the UK, in Germany, Austria, Switzerland and other countries, it is not always possible to pay even for an entire meal.
If they accept credit cards, mostly, only Visa and MasterCard are accepted, Amex and other Diners Club cards often aren’t. Even where you you can pay with debit card (mostly Maestro, Europe’s most prolific debit card platform), credit cards might not be accepted, even MasterCard. So don’t exaggerate, but do bring some cash with you, and no, USD are almost nowhere accepted (except in Switzerland, but they accept almost everything, as long as you accept some outrageous fees).
Excellent information, Bart. Thank you! I never had a problem paying for meals with a credit card in France or Italy, but it never occurred to me that a card would be refused, From now on, I will always be sure to have some cash in local currency.
Don’t get scared either, but yes, it is wise to ask before you order if they accept (credit) cards, and/or have some cash. About €20 to €50 should be more than enough. Nothing as humiliating as being escorted to an ATM…
As said, it depends alot of location and type of restaurant, in France, you’re mostly safe (they have a big ‘carte bleue’ tradition), by far most hotels will accept them, too, many restaurants do, but say a German coffee shop or a Danish deli, many ambulant businesses… I wouldn’t try my luck. What might happen, too, is that they refuse payements under a certain amount, or charge a fee, say 50ct, for a card payment. For the time being, that is still legal, although there are some new European rules in the making about that.
More excellent information!
I strongly agree with the pay the balance every month. However I am always surprised at how the US is so far behind in use of credit cards. While I rarely use it for amounts less than $20 most of my friends (in their 60’s and 70’s) rarely use cash these days and certainly young people do not. On my visit to the USA this year I was pleased to see more use of the PIN number. In Australia, signatures have gone and I was amazed on my previous visit to the USA in 2014 to have to use my signature. Tap n’go is more popular these days and many use their cell phones as credit cards (but not for me yet). They say New Zealand may be second after Denmark in getting rid of cash but I think that is a long way off. Australia will probably get rid of cheques soon. My American friends talk about sitting down to write then posting off cheques. I write about 3 or 4 cheques per year. I either use credit card or online bank exchange.
If you don’t mind me asking, what cards do you use? My friend has been pushing me to get American Express for some of the reasons you mention.
A MasterCard from Citi Bank.